The European Central Bank (ECB) is preparing to launch a tokenized euro for institutional markets in September, creating a regulated blockchain-based settlement asset directly issued by the central bank. The initiative, known as Pontes, will initially serve banks, financial institutions and licensed market operators rather than retail users.
It will connect distributed ledger technology (DLT) platforms with the Eurosystem’s TARGET Services, allowing securities transactions to be settled using central bank money. The project is separate from the ECB’s planned digital euro for consumers and could become an important part of Europe’s blockchain-based financial infrastructure.
ECB Executive Board member Isabel Schnabel outlined the approach at the recent Jackson Hole conference. She described the tokenized euro as a programmable reserve that could provide a trusted foundation for new blockchain-based financial markets.
Tokenisation can foster European integration and enhance monetary policy implementation, says Executive Board member @Isabel_Schnabel. To unlock its full potential, central banks should bring reserves on-chain, as envisaged under Projects Pontes and Appia https://t.co/I04bEXuELT pic.twitter.com/vm64Tyd8fa
— European Central Bank (@ecb) August 28, 2026
The distinction between the tokenized euro and the digital euro is important. The new initiative is designed for wholesale financial markets, while the digital euro is intended for everyday use by the public.
Under the Pontes project, institutional participants will initially be able to choose between settling transactions using cash tokens on a Eurosystem ledger or completing settlement through T2, the eurozone’s real-time gross settlement system.
The project will use Hash-Link technology to synchronise delivery-versus-payment transactions. In simple terms, this is intended to ensure that an asset and its payment change hands together. Later upgrades are expected to bring smart contracts, continuous processing and full legal finality to the Eurosystem blockchain platform.
The ECB has already tested the concept. Between May and November 2024, a pilot involving 64 institutions from nine countries settled almost €1.6 billion in central bank money using blockchain infrastructure. The experiment covered both payments and securities settlement.
Schnabel has also questioned whether privately issued stablecoins can provide the same level of resilience during periods of financial stress. She argued that stablecoin issuers cannot create new liquidity instantly in the way central banks can.
That does not mean the ECB expects stablecoins to disappear. They are likely to continue playing a role in payments, trading, international transfers, remittances and decentralised markets. Europe’s MiCA regulation already provides a framework for compliant stablecoin issuers.
The need for alternatives is particularly clear from the size of the global stablecoin market. DeFiLlama estimates that the market is worth about $304.6 billion, with dollar-based tokens accounting for most of it. Euro-pegged stablecoins, by comparison, represent less than $1 billion.
A successful tokenized euro could therefore give European institutions a stronger alternative to dollar-based blockchain liquidity. It could also reduce counterparty and operational risks by allowing regulated financial assets to settle directly against central bank money.
The ECB plans to decide the longer-term architecture through its Appia project by 2028. Three options are being considered: a single unified ledger, a central bank ledger connected to private blockchains, or several interoperable ledgers. The direction is clear even if the final design is not. Europe wants central bank money to have a place in the rapidly developing onchain financial system.
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